August, 2008:

The gas and power deal signed with the mainland draws Hong Kong into the framework of the national energy policy for the first time. The agreement, kept under wraps until its announcement on Thursday, will bring benefits. It guarantees our city a long-term supply of clean energy, rather than leaving sourcing to the city’s two electricity companies. This should help reduce emissions that contribute to the region’s air pollution. And with Hong Kong and Guangdong on the same energy platform, greater co-operation can be expected in fighting pollution.

Under the deal with the National Development and Reform Commission, state-owned China National Offshore Oil Corp (CNOOC) will continue to supply Hong Kong with natural gas for a further 20 years; China Guangdong Nuclear Power Holding Company will renew its supply agreement for 20 years; and, in about five years, the city will also get access to natural gas from Central Asia via the second west-east pipeline to the Pearl River Delta.

The deal holds out the prospect of cleaner air – through reducing the reliance on coal, which is used to generate 60 per cent of our electricity – and of cheaper power in the future.The guarantee of natural gas supplies appears to derail CLP Power’s plans to build a HK$10 billion liquefied natural gas terminal on the Soko Islands, off Lantau. There is no longer a need to worry about supplies from CNOOC running out. With the local electricity companies’ returns linked to the value of their investment in fixed assets, building the terminal could have inflated power bills for CLP’s customers.

On the face of it, the deal is a winner for the environment and for consumers. Whether it lives up to Chief Executive Donald Tsang Yam-kuen’s description as “extremely good news” depends on how the details unfold. Nonetheless, it was a welcome development for a leader facing his worst opinion poll results since taking up his post in 2005. The timing will do no harm either to the chances of pro-government candidates in next weekend’s Legislative Council election. It was not good news for blue-chip CLP shares, which were hammered yesterday while the market rose overall, with analysts cutting forward earnings forecasts and target price.

The government took the market by surprise with its announcement of the deal not long before a decision was expected on the Soko Islands terminal and ahead of the start of new schemes of control for the two electricity suppliers in October. The extent of any economic benefits depends on several factors. Pricing will be determined by commercial principles. It could be affected if CNOOC needs to tap alternative sources of gas to guarantee supply. CLP will need to build only a short pipeline to connect its Black Point plant at Tuen Mun with an LNG terminal planned by PetroChina for Dachan Bay in Shenzhen in 2011. But both CLP and Hongkong Electric could jointly face future investment in an LNG terminal in Shenzhen.

The schemes of control that regulate the marketing of electricity have served Hong Kong well over the years by encouraging investment in new generators and networks to supply growing demand. But they have been criticised for encouraging over-investment in fixed assets, which was reflected in electricity tariffs.

In this case the government’s intervention in the market makes sense. Integration with mainland energy policy guarantees supply of clean energy sources to our electricity suppliers, with the promise of cheaper power and clearer air. Given the cost of an LNG terminal on the Soko Islands and environmental concerns, the government has made a politically wise choice.

Hong Kong and the mainland signed a new energy deal yesterday that guarantees continued supplies of natural gas and nuclear power for 20 years and holds out the prospect of cleaner air and cheaper electricity.

The deal, which took analysts by surprise, also appeared to put paid to plans by CLP Power (SEHK: 0002) for a controversial liquefied natural gas terminal on the Soko Islands, off Lantau.

Under the deal with the National Development and Reform Commission, state-owned gas supplier China National Offshore Oil Corporation will continue to supply Hong Kong with natural gas for a further 20 years.

The city will also receive gas from the nation’s second west-east natural gas pipeline being built to transport gas imported from Central Asia to the Pearl and Yangtze river delta regions.

The deal marks the first time Hong Kong has been included in the nation’s energy supply blueprint.

The 4,800km pipeline is expected to reach Shenzhen in about five years. Hong Kong officials estimated the city would receive about 1 billion cubic metres of gas a year from this source.

The agreement opens up opportunities for Hong Kong companies to invest in natural gas developments in Guangdong.

Under the deal, the China Guangdong Nuclear Power Holding Company will renew its supply agreement with Hong Kong for a further 20 years.

Speaking at the signing ceremony yesterday, Chief Executive Donald Tsang Yam-kuen described the agreement as “extremely good news” for Hong Kong’s power supply and environment.

Secretary for the Environment Edward Yau Tang-wah said the main purpose was to ensure a long-term, stable energy supply.

“What is more important is that we do not need to build LNG terminals in Hong Kong any more. So, there will be no more pressure for raising tariffs as a result of investment,” he said.

CLP’s HK$10 billion Soko project had been expected to inflate by an estimated 13 per cent the value of the power company’s net assets, on which electricity tariff rises are based.

The agreement puts a big question mark over a preliminary 20-year deal CLP made with British-based liquefied natural gas supplier BG two months ago for the project.

CLP said it would study the implications for the project, which “is already at an advanced stage”, and study new options. The terminal was designed to replace dwindling supply from Hainan’s Yacheng gas field in 2013.

A government spokesman last night declined to say if the new agreement would kill the project, but added: “The need for that project is greatly reduced.”

Hongkong Electric (SEHK: 0006) welcomed the agreement. Green groups also hailed it, saying they believed it would bring better air quality to the city.

Carbon dioxide emissions can be reduced by 50 per cent when liquefied natural gas is used instead of burning coal to generate power. And sulfur dioxide – a major source of air pollution here – can be cut by more than 90 per cent, according to environmental officials.

Hong Kong and the mainland signed a new energy deal yesterday that guarantees continued supplies of natural gas and nuclear power for 20 years and holds out the prospect of cleaner air and cheaper electricity.

The deal, which took analysts by surprise, also appeared to put paid to plans by CLP Power for a controversial liquefied natural gas terminal on the Soko Islands, off Lantau.

Under the deal with the National Development and Reform Commission, state-owned gas supplier China National Offshore Oil Corporation will continue to supply Hong Kong with natural gas for a further 20 years.

The city will also receive gas from the nation’s second west-east natural gas pipeline being built to transport gas imported from Central Asia to the Pearl and Yangtze river delta regions.

The deal marks the first time Hong Kong has been included in the nation’s energy supply blueprint.

The 4,800km pipeline is expected to reach Shenzhen in about five years. Hong Kong officials estimated the city would receive about 1 billion cubic metres of gas a year from this source.

The agreement opens up opportunities for Hong Kong companies to invest in natural gas developments in Guangdong.

Under the deal, the China Guangdong Nuclear Power Holding Company will renew its supply agreement with Hong Kong for a further 20 years.

Speaking at the signing ceremony yesterday, Chief Executive Donald Tsang Yam-kuen described the agreement as “extremely good news” for Hong Kong’s power supply and environment.

Secretary for the Environment Edward Yau Tang-wah said the main purpose was to ensure a long-term, stable energy supply.

“What is more important is that we do not need to build LNG terminals in Hong Kong any more. So, there will be no more pressure for raising tariffs as a result of investment,” he said.

CLP’s HK$10 billion Soko project had been expected to inflate by an estimated 13 per cent the value of the power company’s net assets, on which electricity tariff rises are based.

The agreement puts a big question mark over a preliminary 20-year deal CLP made with British-based liquefied natural gas supplier BG two months ago for the project.

CLP said it would study the implications for the project, which “is already at an advanced stage”, and study new options. The terminal was designed to replace dwindling supply from Hainan’s Yacheng gas field in 2013.

A government spokesman last night declined to say if the new agreement would kill the project, but added: “The need for that project is greatly reduced.”

Hongkong Electric welcomed the agreement. Green groups also hailed it, saying they believed it would bring better air quality to the city.

Carbon dioxide emissions can be reduced by 50 per cent when liquefied natural gas is used instead of burning coal to generate power. And sulfur dioxide – a major source of air pollution here – can be cut by more than 90 per cent, according to environmental officials.

Cheaper electricity bills and cleaner air may be on the way under a deal to boost the amount of power the mainland pumps into Hong Kong’s power grid.

Under an agreement, Beijing has promised to provide ongoing supplies of nuclear-generated electricity and an extra source of natural gas for at least the next 20 years.

Hong Kong officials said a sustained supply of clean energy from the mainland will greatly reduce the need of CLP Power to build a liquefied natural gas terminal on the Soko Islands.

CLP welcomed the deal but said it did not deal fully with expected gas shortages, adding that planning for the terminal is at an advanced stage.

Chief Executive Donald Tsang Yam-kuen and the National Development and Reform Commission and Administrator of the National Energy Administration Zhang Guobao signed a memorandum of understanding in Hong Kong yesterday.

“A stable supply of clean energy will benefit our environment and can relieve the pressure for electricity tariff increases,” Tsang said

Beijing has agreed to supply nuclear-generated power to Hong Kong, at no less than the current level, for the next 20 years.

In addition, China National Offshore Oil Corporation will supply natural gas over the same period. A feasibility study will also be carried out to look at supplying natural gas to Hong Kong via the Second West-East Natural Gas Pipeline while an LNG terminal on the mainland will be built in Shenzhen. CLP claims the current supply of natural gas from CNOOC is running out.

But a government source said CNOOC will look for natural gas from nearby areas to guarantee supply. PetroChina has signed an agreement with Turkmenistan from where natural gas will be supplied to the mainland – even as far as Shenzhen, the source added.

PetroChina also plans to build an LNG terminal in Da Chan Bay in Shenzhen in 2011, which is only 10 kilometers north of Hong Kong. This would require CLP to put down only 4 kilometers of pipeline.

The source said PetroChina would allow CLP and Hongkong Electric to jointly build another LNG terminal in any other part of Shenzhen.

The new scheme of control agreement for the two electric companies becomes effective in October and the government has been considering the electricity tariffs based on costs and future investment.

The government source said CLP, which has total assets of HK$78 billion, planned to invest HK$10 billion to build the Soko Islands terminal.

Given the new rate of return is 9.99 percent, CLP will invest HK$1 billion less a year, the source said.

Environment secretary Edward Yau Tang-wah said yesterday currently 60 percent of electricity in Hong Kong is generated by coal, 20 percent by natural gas and 20 percent by nuclear.

HONG KONG (AFP) — Hong Kong and China signed nuclear and gas energy deals on Thursday which the southern city hopes will reduce both pollution and the need for a controversial liquefied gas terminal.

The deals aim to provide Hong Kong with a consistent supply of both natural gas and nuclear energy for the next two decades, as it tries to reduce its dependency on coal-fired power, chief executive Donald Tsang said.

“The sustained supply of clean energy from the mainland will greatly reduce the need for Hong Kong to build a liquefied natural gas (LNG) terminal within its territory,” he told reporters.

“The resulting reduction in capital investment by the power company concerned will relieve the pressure for electricity tariff increases.”

“(Hong Kong) can also benefit from improved air quality by increasing the use of clean energy and reducing the emissions of power plants.”

Hong Kong would sign a 20-year natural gas supply agreement with China’s third largest oil company, CNOOC Group, and a 20-year nuclear power deal with neighbouring Guangdong province, a government statement said.

There will also be a feasibility study for supplying further natural gas to Hong Kong via a pipeline from central Asia and the deal meant Hong Kong firms could build a gas terminal in mainland China.

Tsang signed the agreement with Zhang Guobao, China’s top energy official, in Hong Kong. The memorandum of understanding guarantees there will be no reduction in supply from current levels.

Hong Kong relies on coal-fired power for much of its energy, which is one of the major contributors to pollution from within the territory.

The city has faced criticism that it is not doing enough to reduce the smog, much of which originates across the border and has raised worries it could damage the economic centre’s ability to attract top international talent.

Local energy firm China Light and Power has been pushing to build an LNG terminal on one of Hong Kong’s islands, but has hit concerns from environmental groups that the proposed location could damage the local wildlife.

Robin Kwong in Hong Kong, The Financial Times Limited – August 28 2008

The Hong Kong government has backed away from approving a controversial natural gas terminal in an ecologically sensitive area, in what is seen as its first serious attempt to tackle air pollution in the territory in recent years.

China Light and Power, Hong Kong’s biggest energy company, has long argued that it needed to build an HK$8bn ($1bn) liquid natural gas receiving terminal to ensure a stable future gas supply for the territory.

Having more natural gas was also a prerequisite for improving Hong Kong’s air quality, according to CLP, which said it now had to burn more coal to conserve its dwindling gas supplies.

However, environmental activists claim that the terminal, which CLP proposed to build on two small islands on the edge of Hong Kong’s territorial waters, will endanger marine life, particularly the rare pink dolphins and finless porpoises that are Hong Kong’s only indigenous marine mammals.

Edward Yau, environment secretary, said on Thursday that the need for the terminal was greatly reduced after Hong Kong signed a series of energy deals with Beijing that will ensure a stable supply of gas to the territory for the next 20 years.

Under the agreement, the state-controlled China National Offshore Oil Corporation will renew its supply agreement to Hong Kong for another 20 years, and Petro­china will still study the feasibility of supplying gas to Hong Kong from central Asia via pipeline as well as an LNG terminal that Petro­china is planning to build in neighbouring Shenzhen economic zone.

A senior government official, who preferred to remain anonymous, said the government expected that, with this agreement in place, CLP would increase its use of natural gas from a third of its fuel mix to half, thus improving Hong Kong’s air quality. CLP is the biggest polluter within Hong Kong, though the territory also suffers from pollution generated by factories across the border.

Andrew Brandler, chief executive of CLP, said he welcomed the agreement, but the new supply will only “partly fill the gas shortage being faced by us”.

“Imports of LNG will still be needed to meet our full requirements as our need for clean natural gas continues to grow,” Mr Brandler said.

While the new gas supply is still subject to CLP reaching a commercial agreement with CNOOC and Petrochina, the senior official said it was “an obvious choice” over CLP building its own terminal within Hong Kong.

The lack of government support for a Hong Kong terminal also calls into question a 20-year gas supply deal that CLP had initially agreed on with BG Group, the UK gas company, in June. CLP declined to comment on the impact the latest developments would have for the BG deal.

Chief Executive Donald Tsang Yam-kuen on Thursday afternoon hailed a new agreement with the mainland over the supply of electricity, nuclear power and natural gas saying it would satisfy Hong Kong energy needs over the next 20 years.

He said the new agreement would ensure Hong Kong could get stable supplies of natural gas from the mainland. This would help ease Hong Kong’s problem with air pollution.

Mr Tsang made the comments before signing a memorandum of understanding (MoU) with China’s National Energy Administration vice-chairman Zhang Guobao.

“The sustained supply of clean energy from the mainland will greatly reduce the need for Hong Kong to build a liquefied natural gas (LNG) terminal within its territory,” he said.

“The resulting reduction in capital investment by the power companies concerned will also relieve pressure for electricity tariff increases,” Mr Tsang said.

“The government could also benefit from improved air quality by increasing the use of clean energy such as natural gas and reducing emissions of power plants,” he said.

“According to the MoU, the central government’s China Guangdong Nuclear Power plant will also renew its supply agreement with Hong Kong for a further term of 20 years,” he explained.

On the supply of natural gas, the central government supports China National Offshore Oils renewal of its supply agreement with Hong Kong for a further term of 20 years.

The feasibility of supplying natural gas to Hong Kong via the second west-east natural gas pipeline would also be studied. The central government would jointly build an LNG terminal with Hong Kong in the mainland. This will supply natural gas to the territory.

A large majority of the would-be legislators who responded to a Greenpeace survey said they would seek tougher controls on power plant emissions of greenhouse gases if elected.

The poll, conducted by the environmental group this month, also showed that all candidates described the government’s performance in addressing climate change as no more than fair.

Seventy-one of the 111 candidates and slates of candidates responded to a questionnaire distributed by the group. Of these, 42 were from geographical constituencies and 29 from functional constituencies. Most candidates for the geographical constituencies were grouped into lists.

Nearly all of the respondents said they were concerned about the effect of climate change in Hong Kong, in particular in the areas of public health, ecology and weather.

However, Kwok Ka-ki, incumbent lawmaker for the medical constituency, and the candidates on the Kowloon West list led by Lau Yuk-shing said it was not urgent that the government address climate change.

Fifty-nine of the 71 respondents pointed out that the biggest source of greenhouse gases was the electricity-generating sector, and the same number demanded that the government regulate power plants’ carbon emissions. They said they saw the task as a top priority.

Last month, legislators failed to press environment officials to include carbon dioxide as one of the statutory regulated air pollutants in an amended law to tighten control of emissions affecting air quality.

Prentice Koo Wai-muk, a Greenpeace campaigner, said the poll results showed there was a strong consensus among the candidates on climate-change issues regardless of what type of constituency they were contesting.

He said it was the responsibility of the voters to understand what their choice of candidate meant in terms of addressing climate change.

“Different candidates might have different areas of priority concerns. So we will not sanction any candidates,” he said.

Choy So-yuk, incumbent Hong Kong Island candidate for the Democratic Alliance for the Betterment and Progress of Hong Kong, said her party had decided not to answer Greenpeace’s poll because members had replied to another green group’s call for pledges on environmental protection, including climate change. She said the DAB supported regulating power plants’ carbon emissions.

WASHINGTON: China set a new world record this year, surpassing the United States as the world’s biggest emitter of CO2 from power generation, according to new data from the Center for Global Development (CGD). But on a per capita basis, U.S. power-sector emissions are still nearly four times those of China.

The data, from the first annual update of CGD’s Carbon Monitoring for Action (CARMA) database, show that China accounts for more than half of the increase in global CO2 emissions due to power generation over the past year, mostly due to a surge in construction of new coal-fired plants (*This number was revised on 8/28/08*).

According to the new CARMA data released today, Chinese power plants will produce about 3.1 billion tons of CO2 this year, up from about 2.7 billion tons in 2007(*This number was revised on 8/28/08*). Power plants in the U.S will produce about 2.8 billion tons of CO2 this year, about the same as last year. If all power plants currently planned in China and the U.S. are eventually built, China’s power-related emissions will exceed those of the U.S. by 40 percent, although on a per capita basis the U.S. would still be the far-and-away the larger polluter from power production. The U.S. emits much more than China from transportation, in both absolute and per capita terms, because of the heavy reliance on cars.

Globally power generation accounts for more than a quarter of all emissions of CO2, the main greenhouse gas causing climate change, and the proportion is rising quickly.

CARMA data show that global emissions of carbon dioxide (CO2) from power generation have grown more than 34 percent in the past eight years, to 11.4 billion tons per year from 8.5 billion tons in 2000, notwithstanding some improvements in efficiency and slowly growing reliance on renewable energy. Two-thirds of the increase since 2000 is attributable to a surge in emissions from China.

“The new data show that emissions from power generation are racing in the wrong direction,” says CGD Senior Fellow David Wheeler. “We urgently need to cut power-related CO2 emissions and to very rapidly bring down the price of proven, zero-carbon renewable power sources, such as wind and solar.”

The new data are cause for serious concern, including for China itself and for other developing countries. Climate scientists warn that the amount of CO2 and other greenhouse gasses in the atmosphere must be quickly stabilized to avert climate catastrophe, which will hit first and worst in the developing world, with declining agricultural productivity, droughts, floods, and rapid sea level rise hitting densely populated, low-lying regions.

The additional 2.9 billion tons of power-related CO2 emissions per year since 2000 is equivalent to the annual carbon emissions of Australia, France, Germany, Italy, and Spain combined.

The world’s top-ten power sector emitters in absolute terms are China, the United States, India, Russia, Germany, Japan, the United Kingdom, Australia, South Africa, and South Korea. If the 27 member states of the European Union are counted as a single country, the E.U. would rank as the third biggest CO2 polluter, after China and the United States.

In per capita terms, emissions from the U.S. power sector are the second highest in the world. Americans’ electricity usage produces about 9.5 tons of CO2 per person per year, compared to 2.4 tons per person per year in China, 0.6 in India, and 0.1 in Brazil. Average per capita emissions from electricity and heat production in the EU is 3.3 tons per year. Only Australia, at greater than 10 tons per year, emits more power-related emissions per person than the U.S. In many developing countries, per capita power consumption is extremely low, and millions of people lack access to electricity at all.

In one of the few encouraging findings, the CARMA data reveal that carbon intensity—the amount of carbon emitted per unit of power produced—shows signs of declining in some major countries, including China, India, Russia, and South Africa. But the decline is not nearly fast enough to offset the rapid growth in power consumption.

“Higher fuel prices lead power companies to improve the efficiency of fossil-fueled plants whenever possible. But those measures are inherently modest and total global emissions continue to grow rapidly,” said CGD researcher Kevin Ummel, who manages the CARMA database. “The needed shift to renewable and low-carbon alternatives is happening far too slowly to avert dangerous climate change.”

Carbon intensity has declined in Europe since 2000—from 965 to 941 pounds of CO2 per megawatt-hour of electricity—but is actually projected to rise in the future to 983. The U.S. shows a similar pattern, with carbon intensity declining slightly early in this decade and now beginning to rise again. “Europe’s projected increase in carbon intensity is disconcerting and reflects a growing reliance on coal as oil and natural gas prices rise,” said Wheeler. “Given Europe’s past leadership in renewable technologies, this move back to coal is a serious blemish on an otherwise encouraging record.”

CARMA provides the estimated CO2 emissions of more than 50,000 power plants worldwide, based on publically disclosed emissions data and a model utilizing plant-specific fuel types and technologies. The CARMA website shows ranked lists of plant-level emissions globally as well as for countries, states, provinces, and cities. For the U.S., CARMA includes additional data for counties, metro-areas, and congressional districts. The database also includes information on the corporate ownership of plants. Since the data-intensive site was launched last November more than 300,000 visitors have explored and downloaded the data at www.CARMA.org.

The company data is important to investors, because power companies that utilize low-carbon technologies—like hydropower, nuclear, wind, and solar—face fewer potential climate-related liabilities, such as carbon charges under future regulation. CARMA makes it easy to find these companies: large power producers with low-carbon intensity earn a large Green icon, while large power producers with high CO2 intensity earn a large Red icon.

The Dirty Get Bigger
The top-ten power companies in the world in terms of power sector emissions include five in China, two in the U.S., one in India, one in South Africa, and one in Germany. The world’s biggest corporate carbon emitter is China’s Huaneng Power International, whose plants pump out about 285 million tons of CO2 per year, far more than the 227 million tons produced by all of the power plants in the United Kingdom combined and almost as much as the entire continent of Africa (335 million tons).

The United States’ biggest CO2 emitter is Southern Co. with annual emissions over 200 million tons, followed by American Electric Power Company Inc. at 175 million tons, and Duke Energy Corp. at 112 million tons.

According to Ummel, “A number of power companies have expressed desire for national policies to limit emissions and promote alternative energy,” he said. “But without financial incentives for big emitters to change their behavior, they continue operating and building carbon-intensive plants – and Earth’s climate moves closer to the breaking point.”

CGD president Nancy Birdsall says that the new CARMA data highlights the urgency and importance of reaching an international agreement that provides resources and technical support for poor countries to grow economically and reduce poverty, while also stabilizing and eventually reducing emissions.

“The rich countries created this problem and will have to take the lead in solving it. But the rapid growth in developing country power sector emissions reminds us that we won’t be able to avert rapid climate change, and the harm it will cause to the world’s poorest people, without also finding a way to enable poor countries to both grow and cut emissions,” Birdsall said. “Like it or not, we are all in this together and currently we are headed in the wrong direction.”

BEIJING – China’s ballooning appetite for energy has helped push global prices higher for oil and coal, much of which is wasted.

Energy efficiency in China is just a fifth of U.S. levels. The government has put a priority on improving that by closing hundreds of small, coal-fired power plants and steel mills, raising fuel economy standards and consumption taxes on gas-guzzling cars, and pushing stores and apartment owners to replace incandescent bulbs with green ones.

But energy policy made through government fiat will only take you so far. Even as Beijing issues decrees about reducing the amount of energy used, it still subsidizes gasoline and electricity, and it’s falling short of its conservation targets.

Free-market economists – including some Chinese advisers to the communist government – argue that price is the best way to save energy. High prices have pushed down U.S. oil consumption about 3 percent this year, the biggest drop in a generation.

China’s motorists pay about $3.40 a gallon for gasoline – up 17 percent in the last two months – but that’s less than U.S. prices, and it hasn’t done much to slow oil consumption or car purchases.

(The price is also far less than the $8-a-gallon price in Hong Kong, where the government is trying mightily to discourage people from buying cars.)

China’s government finds it difficult to let go of price controls because some companies say higher energy costs are forcing them to close factories and move to cheaper locations such as Vietnam, eliminating thousands of jobs, said Huang Fanzheng, a senior adviser to the Chinese government and one of China’s most respected economists.

“So we should not only consider the influence of price on consumption, but also consider how much companies can bear, including foreign companies,” he said.

Price controls have other distorting effects. China imports most of its oil. China’s refiners pay world prices for those imports but collect far less from gasoline consumers. The losses are usually covered by government cash, but that’s no sure thing.

One result is an incentive to sell cheap, low-quality gasoline. It also discourages refiners from investing in expensive technology to eliminate pollutants such as sulfur, which automakers say ruins their more advanced emissions controls.

So while Beijing has ordered China’s governors to cut air pollution by 20 percent over the next decade, the oil refiners won’t be much help.

Nor will the power companies. China leads the world in renewable energy used for electricity generation, with 152 gigawatts of power from sources including wind, nuclear and hydro. (One gigawatt is 1,000 megawatts, or roughly the size of a large power plant.)

But China is the world’s biggest consumer of coal. Eighty percent of its electricity comes from coal-fired power plants. Although coal is the country’s most abundant energy resource, China has been a net coal importer since 1992. Smoggy Beijing has giant coal smokestacks peeking out among the city’s skyscrapers. Most of those power plants are shut for the Olympics, but they’ll fire up again once the games are over.

Wang Jiacheng, deputy director of the government’s Academy of Macroeconomic Research, says China’s per-capita electricity use has climbed an average of 10.28 percent a year since 1990.

Coal importers, like oil importers, pay world prices for supplies but get discount payments from customers. So China is going through a coal shortage. That’s pushing companies to curb production or switch to diesel-powered generators, one of the most energy-inefficient ways to produce electricity.